Transcript Presentation 4 - Nimmo~Bell & Company

Evaluating the management of invasive
species: A role for non-market valuation
and benefit transfer
AARES Workshop
13th of February, 2007
Queenstown, New Zealand
John Rolfe
Central Queensland University
1
Key reasons for protection

Protection of industry
(agricultural) base


Protection of
biodiversity


Many pests and
diseases can cause
widespread losses in
industry
Both species loss and
impacts on ecosystems
Protection of human
health

Diseases, pollen,
animals
2
The economics of prevention and
control

Industry impacts



Introduced species will
cause
 Agricultural losses
 Impacts on rural
communities
But private incentives for
control are often weak
 ‘cascading’ externalities
means that lack of control
impacts on other farmers
Case for central control to
avoid widespread private
losses
3
The economics for control and
prevention – 2

Biodiversity impacts



Species on public
lands


Introduced species
will cause
biodiversity losses
Public values for
maintaining
biodiversity justify
investment of public
funds in control
Many ‘points of
invasion’ on public
lands
Public health
arguments
4
The economics of control in biodiversity
Values
Costs of
control
Net value of
production
impacts may
be added
Value of
biodiversity
Intensity of incursion
5
Bioeconomic modelling

Dynamics of prevention/control
measures & outbreaks of invasive
species are more complicated





Biological growth behaviour is nonlinear
Feedback loops with prevention &
control measures
Threshold effects
Ecosystem impacts
Range of bioeconomic models in use
/ needed to provide suitable
information about costs of invasive
species and the control costs
6
Combining production and biodiversity
issues
Values
Costs of
control
Averted agricultural
and biodiversity
losses
Intensity of incursion
7
Weighing up the costs and benefits

Benefits of maintaining biodiversity difficult to
estimate



Mostly associated with indirect and non-use values
Need to be assessed with specialist techniques
Sometimes there are other costs to consider


Impacts of biological controls
Heritage, cultural impacts
8
The precautionary principle

Values that population holds for
protecting biodiversity will support
both



Introduction of ‘trump’ rules - SMS
Values
Use of extended cost-benefit
analysis should generate much the
same outcome as support for SMS
9
Value taxonomy – coral reef example
10
Non – market valuation techniques

Revealed preference techniques

Travel cost method


Hedonic pricing


used for recreation impacts
used for housing/lifestyle impacts
Averted expenditure techniques

Often used to estimate the value of
indirect use benefits

Storm protection benefits of mangroves
11
Contingent behaviour



Extensions to travel cost method
Ask people about planned changes
in behaviour to different scenarios
Allows estimates of value for
changed environmental conditions
12
Non-market valuation techniques 2

Stated preference techniques





Contingent valuation
Choice modelling
These are capable of estimating
non-use values
Key techniques to use in relation to
values for biodiversity
But often complex, expensive and
time consuming to apply
13
Benefit transfer



The transfer of values from one case
study to another policy situation
Most studies focused on particular issues,
and are not designed to transfer to other
situations
Values may be sensitive to characteristics




Populations involved
The way the tradeoffs are framed
The scope at which the issue is pitched
The scale of the tradeoffs
14
Key mechanisms for benefit transfer

Point – total value


Point – marginal value


Value per unit transferred
Benefit function transfer


Total value from a previous study
Function allows adjustments for site
and population differences
Bayesian transfer

A range of previous and current results
can be integrated
15
Three main approaches to benefit
transfer



‘The Prospector’ – searches for
suitable previous studies and
transfers results across
‘The Systematic’ – designs a
database of values suitable for
benefit transfer
‘The Bayesian’ – combines both a
review of previous studies with
potential data gathering
16
Examples of the Prospector


A number of studies conducted in
the Fitzroy dealing with water
allocation and riparian development
issues
Results have been transferred to
other policy issues dealing with
vegetation, water development,
protection of cultural heritage
17
Question X: Options A, B and C.
Please choose the option you prefer
most by ticking ONE box.
Fifteen-year effects
How much I
pay each
year
Option A
$0
Option B
$20
Option C
$50
Healthy
vegetation left
in floodplains
Kilometres of
waterways in
good health
Protection of
Aboriginal
Cultural sites
Unallocated
water
20%
1500
25%
0%
30%
1800
35%
5%
40%
2100
45%
10%
I would
choose
18
5
4.5
4
3.5
3
2.5
2
1.5
1
0.5
0
0.12
0.1
0.08
0.06
0.04
0.02
0
2000 2001 2002 2003 2005
Brisbane
Vegetation
$ per 1km improvement
$ per 1% improvement
Values for vegetation and waterways
over time
2000 2001 2005
Rockhampton
Waterways
19
Examples of the Systematic


Windle and Rolfe (2007) developed a
broad data base of NRM values in Qld
Identify the values for improvements in 3
key areas of the investment plans for
regional groups





Healthy vegetation
Healthy waterways
Healthy soils
Identify sensitivity to regional issues
Identify sensitivity to framing issues
20
Regional choice set example
21
Summary of values
Soil
Water
Vegetation
$ value of each 1% improvement
Brisbane – South East Queensland
Regional model
3.05
3.42
3.01
Statewide model1
5.34
4.99
7.69
Toowoomba – Murray Darling
Regional model
4.02
6.28
2.35
Mackay – Mackay Whitsunday
Regional model
4.60
7.82
2.42
Rockhampton – Fitzroy Basin
Regional model
3.70
6.69
4.48
Pooled models
Regional model
3.72
5.80
2.88
Statewide model
4.64
6.62
4.54
22
Some issues

These examples of a benefit
transfer approach are difficult to
relate to many invasive species
issues


Often issues are more specific and it is
unclear how general values can be
applied
Unclear how values are set when
elements of risk and uncertainty are
present
23
Dealing with the ‘specific to general’
tradeoffs

A benefit transfer application will
rarely satisfy ‘ideal’ conditions




Identical site characteristics
Identical population characteristics
Identical policy and tradeoff situations
Better to think of a BT application
as a filtering mechanism


Identify if there are major differences
between benefits and costs, or
Identify if more detailed analysis needs
to be applied.
24
Dealing with the risk and uncertainty
issues

Issues of risk and uncertainty often
ignored in stated preference studies


Very difficult to communicate these
alongside information about attributes
and alternatives in choice sets
But two key components of non-use
values are related to these issues


Option Value
Quasi-option value
25
percentage
Some evidence of larger option values
100
90
80
70
60
50
40
30
20
10
0
Brisbane
Toow’mba
Mackay
Rockh’ton
Use value

Option value
Bequest
value
Existence Quasi-option
value
value
Qld surveys for BT database on soils, waterways, veg.


Asked to rated a series of questions representing use and
non-use values - From 1 most to 5 (least important)
Percentage of respondents scoring values with a “1” or”2”
26
Values for water reserve
Population
Fitzroy
CNM
Dawson
Brisbane
Not significant
6.59
(3.49 to 11.08)*
2.53
(1.72 to 3.62)
Rockhampton
2.81
(0.06 to 5.97)
Emerald
1.97
(-0.16 to 3.99)
Survey 2 Brisbane
4.13
(2.33 to 6.60)
Survey 1
Late 2000
Late 2001
Rockhampton
3.19
(1.82 to 5.11)
Rockhampton
Indigenous
4.05
(1.85 to 8.19)
Survey 3 Brisbane
Late 2002
5.31
(3.33 to 7.71)
27
Results at different reserve levels show
values of being cautious
Coefficient
0.9
15%
0.6
20%
10%
0.3
5%
0
-5%
-0.3
-0.6
-15%
-10%
-0.9
28
Applying option values to water
resource allocations






Brisbane households would pay $6.59 annually to
reserve each 1% of water in the CNM system
There was 4% currently unallocated
Over 20 years and 300,000 households, present
value is $78M with discount rate of 8%
or $59M with 12% discount rate
Approximately double if count rest of Qld
If 4% were to be allocated = 40,000 ML
At value of $300/ML, total value = $12M
29
Evidence for quasi-option values


Donaghy et al (2004) asked households
about WTP for a 5 year moratorium on
release of GMOs
Significant values estimated




Median and mean WTP estimates of $220 and
$386 per household
Respondents did value opportunity to delay
introduction of GMO’s
Positive and significant income variable
suggests that as income increases so does
quasi-option values
Confirms that quasi-option values exist
30
Implications of including option values:
assessing invasive species control



There is evidence that
community caution about
future impacts flows into
option values and quasioption values
Expect this to also apply to
issues dealing with
invasive species
Just focusing on existence
values may not be
comprehensive
31
Implications for standard use of Cost
Benefit Analysis

Particularly for agricultural products, the
evaluation typically compares net potential
production losses with the costs of
prevention or control


But prevention and control costs typically
funded publicly
This analysis may fail to include:



Existence values for biodiversity impacts
Option and quasi-option values
Values associated with potential social impacts
32
Some policy implications

Important to assess non-use values for
biodiversity impacts in same context as
agricultural ones



Not enough attention paid to option
values
Inclusion of option values may lead to
more cautious assessments




Stated preference techniques can be used for
this
Invasive species
Greenhouse gases
Water development
May reassess the way we deal with
agricultural imports and quarantine
33
The risks in importing tourists and
products
Values
Benefits of
imports
Option values
Potential agricultural costs
Potential loss in
existence values
Probability of incursion
34
Final comments

In relation to dealing with invasive
species, it may be very important to
assess:



However




Existence values
Option and Quasi-option values
It may be difficult to assess values,
Few studies currently exist
More systematic data may be required
Better skills required to integrate these
types of assessments into economic
analysis
35